CITY OF MUSKOGEE v. PHILLIPS

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CITY OF MUSKOGEE v. PHILLIPS

2015 OK CIV APP 57

352 P.3d 51

Case Number: 111501

Decided: 11/21/2014

Mandate Issued: 06/10/2015

DIVISION III

THE COURT OF CIVIL APPEALS OF THE STATE OF OKLAHOMA, DIVISION III

Cite as: 2015 OK CIV APP 57, 352 P.3d 51

CITY OF MUSKOGEE, OKLAHOMA, A Municipal Corporation,

Plaintiff/Appellee,

v.

CATHERINE M. PHILLIPS, a/k/a CATHERINE MASTERSON

and ORLIN PHILLIPS, Defendants/Appellants,

and

MUSKOGEE COUNTY TREASURER;

BOARD OF COUNTY COMMISSIONERS OF MUSKOGEE COUNTY, OKLAHOMA; EASTSIDE BOULEVARD,

L.L.C.; FLOYD HARJO; HILLY HARJO, Defendants.

APPEAL FROM THE DISTRICT COURT OF MUSKOGEE COUNTY,

OKLAHOMA

HONORABLE NORMAN THYGESEN, JUDGE

REVERSED

Matthew C. Beese, Muskogee, Oklahoma, for Plaintiff/Appellee,

David E.

Anderson, Miami, Oklahoma, for Defendants/Appellants.

Bay Mitchell, Judge:

¶1 This is a condemnation action initiated by the City of Muskogee

("Muskogee") against property owners, Defendants/Appellants Catherine Phillips

and Orlin Phillips ("Property Owners"). Property Owners appeal from the trial

court's Order overruling Defendants' exceptions to the Muskogee County

Commissioners' Report in favor of Muskogee. 1

¶2 In January 2012, Muskogee passed and adopted Resolution No. 2385 ("the

Resolution") declaring the necessity for acquiring five parcels including

private residential property for the construction of a parking facility

described therein as a public utility pursuant to In re Application of

Southern Oklahoma Development Trust , 470 P.2d 572. The Resolution

provided "said parking facility is needed for the health and safety of the

Citizen's [sic] of Muskogee by reducing the volume of on-street parking in the

areas near and surrounding [public ways: North "G" Street; North "F" Street;

East Broadway; and, Callahan Street]." The Resolution authorized acquisition of

the subject properties by purchase or if they cannot be purchased, by

condemnation proceedings. The Resolution further called for the parking facility

to be constructed, maintained and operated through a leasehold estate with the

Muskogee Parking Authority, a public trust.

¶3 The married Property Owners are the record owners of two parcels subject

to the Resolution: a vacant lot and the residential property located at 211

North G Street. 2 They have lived there together over 20 years and

Mrs. Phillips had lived in that house (before they were married) for over 40

years. In accordance with the authorization provided in the Resolution, the

properties were appraised and The City Manager attempted to negotiate for the

purchase of the subject properties. 3

¶4 After the attempts to purchase the properties failed, Muskogee filed the

instant action in June 2012, seeking to acquire the properties by condemnation.

The Resolution and an affidavit declaring the necessity of the acquisition were

attached as exhibits to the condemnation Petition. The Affidavit of Necessity,

executed by Muskogee's Director of Public Works, provides in pertinent part as

follows:

In order to economically implement the City project known as the "VA

Parking Project 2012" pursuant to City Council Resolution NO. 2385, it is

necessary to acquire all the property needed to build a parking lot from and

including the areas between North "F" and "G" Streets and Callahan and East

Broadway. The real property subject to this suit is within this described

area. . . . As such, the City has determined that a public necessity exists

for the acquisition of the real property subject to this

suit.

¶5 After proper appointment of Commissioners and the August 2012 filing of

the Report of Commissioners, Property Owners timely filed their Exceptions to

same. 4 Their

primary objection was on the basis that the purported exercise of eminent domain

was for an improper private purpose and not necessary for a lawful public

purpose. Additionally, they asserted the Commissioners' Report suggests the

taking was for the purpose of economic development, which is not a public

purpose to justify the exercise of eminent domain.

¶6 Muskogee responded with the filing of a brief in opposition to Property

Owners' Exceptions and an Application for a Writ of Assistance. It sought to

condemn the properties pursuant to 11

O.S. §22-104(2) and (3), which provides "Every municipality shall have the

right to . . . acquire, own, and maintain . . . real estate for sites and

rights-of-way for any municipal purpose including but not limited to public

utility and public park purposes" and "exercise the right of eminent domain for

any municipal purpose." Id. Muskogee essentially asserted the proposed

parking facility is a public utility for which it may lawfully exercise its

eminent domain power.

¶7 Subsequent to an evidentiary hearing, the trial court ultimately

determined the principal purpose of the taking was a public purpose (while

noting "there may be some tangential private benefits gained by individuals or

private entities") and therefore overruled Property Owners' Exceptions to the

Commissioners' Report. 5 Property Owners appeal.

¶8 We are guided by the Oklahoma Constitution concerning the taking of

private property. Article 2, §23 provides as follows:

No private property shall be taken or damaged for private use ,

with or without compensation, unless by consent of the owner, except for

private ways of necessity, or for drains and ditches across lands of others

for agricultural, mining, or sanitary purposes, in such manner as may be

prescribed by law.

OKLA. CONST. Art. 2, §23 (emphasis added). Our Constitution further generally

provides "private property shall not be taken or damaged for public use without

just compensation." OKLA. CONST. Art. 2, §24. That constitutional provision

additionally states "[in] all cases of condemnation of private property for

public or private use, the determination of the character of the use shall be a

judicial question." Id. 6 The law is clear that "[p]rivate property may

not be taken or damaged by the condemning agency unless the taking or damage is

necessary for the accomplishment of a lawful public purpose." Luccock v. City

of Norman , 1978 OK 66, 578 P.2d 1204, 1206 (citing Art. 2,

§§23 & 24 of the Oklahoma Constitution). Luccock demonstrates that we have

used the terms "public use" and "public purpose" interchangeably in our analysis

of our state constitutional eminent domain provisions, and we therefore view

these terms as synonymous. Id.

¶9 As a general rule, we construe our state constitutional eminent domain

provisions "strictly in favor of the owner and against the condemning party."

Board of County Comm'rs of Muskogee County v. Lowery , 2006 OK 31, 136 P.3d 639 (citation omitted). We

additionally strictly construe eminent domain statutes. Id . As noted in

Lowery , we adhere to a narrow construction of "public purpose" in the

context of eminent domain cases (as opposed to a broader construction of that

term in the context of public funding) as the power of eminent domain should be

exercised with restraint. Id . at ¶11.

¶10 Evidence presented at the evidentiary hearing demonstrates the Property

Owners' property is in close proximity to 800 East Okmulgee, the location of a

commercial office building owned by Eastside Boulevard, L.L.C. ("Landlord").

Landlord leases its building to its tenant, GSA/VA Benefits, which operates a

call center out of the facility. The number of employees working in that

facility has increased in recent years. Although the facility has an on-site

parking lot, VA employees were regularly parallel parking (often on both sides)

on several nearby residential streets.

¶11 Muskogee officials testified the parking congestion on the residential

streets surrounding the VA building created a safety hazard because emergency

responders would have difficultly traveling the streets and/or accessing fire

hydrants due to the number of cars parked on both sides of the road and/or in

such a way as to block access to the hydrants. The VA parking project was

designed to alleviate the parking demands within the neighborhood and thereby

serve the public.

¶12 The record includes a contract executed in June 2012 entitled "Shared

Parking Agreement Between the City of Muskogee and Eastside Boulevard, L.L.C."

This contract provides for Landlord's agreement to donate seven parcels of

property in the subject area to the Muskogee Parking Authority to be held in its

name. In consideration for the contract, the contract further notes Landlord's

plan for expansion of the VA building "by approximately 13,311 square feet for

the future benefit of the GSA/VA Benefits." Muskogee and the Muskogee Parking

Authority agreed to construct and maintain a parking facility with a minimum of

200 spaces in accordance with the Resolution. Finally, the contract contained

the following express agreement: "The City of Muskogee and the Muskogee Parking

Authority agree to lease the parking spaces to VA Benefits employees first

before they are offered to the public ." (Emphasis added).

¶13 City Manager James Buckley testified the parking "congestion problem is a

direct relation to the employees parking on the street." He further testified

that under the terms of the Shared Parking Agreement, if the VA Benefits

employees wanted to lease all of the parking spaces in the proposed parking

facility, they could.

¶14 Based upon the facts and circumstances herein, we find the parking

facility at issue herein cannot be construed as a public utility as it was

designed and established primarily for the purpose of serving a private entity

and/or employees of that entity's tenant. 7 See Lowery , 2006 OK 31, n. 15 (finding the

private electric company was not a public utility on the basis of the absence of

evidence in the record that the company "plan[ned] to supply power or

electricity to members of the public who need it upon equal and reasonable

terms."). Muskogee's reliance on In re Application of Southern Oklahoma

Development Trust , 1970 OK

118, 470 P.2d 572, in support

of its assertion that the parking facility is a public utility is misplaced,

particularly considering the fact that case was not in the context of eminent

domain, but rather, bond issuance (with focus on public economic benefits

sought by means of the parking facility therein). Id. at 574. Lowery

clearly provides that in the context of eminent domain, economic development

alone (not in connection with the removal of blighted property) does not

constitute a public use or public purpose to justify the exercise of eminent

domain as a matter of Oklahoma constitutional law. Lowery , 2006 OK 31, ¶0; 8 see supra discussion at

¶9 .

¶15 Further, insomuch as we find the proposed parking facility is primarily

dedicated to serving the VA Benefits employees and/or Landlord in providing an

off-site parking facility for its tenant, the taking of private property for

such private purpose is constitutionally impermissible. The private character of

the purpose behind the parking facility is particularly illuminated within the

contractual provisions of the Shared Parking Agreement, which expressly

designate that the employees be offered the parking spots before they are open

to the public. 9 In fact, depending upon the number of VA Benefits

employees to accompany the planned expansion of the building, the parking spots

may never be offered to any member of the public. Additionally, the agreement

expressly provides it "is in perpetuity and can only be terminated if

comparable, replacement parking has been provided for the benefit of the GSA/VA

Benefits employees. . . ." While the reduction in the number of employees

parallel parking in the adjacent residential streets may provide an indirect

public benefit by allowing for easier passage and flow of traffic thereon

during certain times of the day, this public benefit is too attenuated to fall

within our strict constitutional confines of "public purpose" to permit a

municipality's exercise of eminent domain.

¶16 Insomuch as we find Muskogee's condemnation of Property Owners' private

property was for an impermissible private purpose, the trial court erred in its

Order overruling Property Owners' Exceptions to the Report of the Commissioners.

Property Owners' brief includes a Motion for appeal-related attorney fees. This

motion is denied without prejudice to the filing of a separate motion in

compliance with Supreme Court Rule 1.14(B).

¶17 REVERSED.

BELL, P.J., and GOREE, J., concur.

FOOTNOTES

1 An

order adjudicating a right to condemn is appealable pursuant to 12 O.S. §952(b)(1) as a final order.

McMillian v. Holcomb , 1995 OK

117, ¶3, 907 P.2d 1034,

1035-36.

2

Property Owners' house was built in approximately 1935 and has 896 square feet

of living space.

3

Muskogee offered Property Owners the appraised values of $32,500 to purchase the

residential property and $1,200 for the lot.

4

Property Owners did not designate the Report of Commissioners for inclusion in

the record on appeal. Thus, we are unable to review its contents.

5 The

trial court refrained from ruling on Muskogee's Application for a Writ of

Assistance.

6 A

"judicial question" is a question of law, which on appeal is reviewed de

novo . Okla. Gas & Elec. Co. v. Beecher , 2011 OK CIV APP 1, ¶¶7-8, 256 P.3d 1008, 1011.

7

Muskogee cannot avoid constitutional restrictions on the power of eminent domain

by merely labeling the proposed parking facility as a public utility. The

purpose and use behind the exercise of eminent domain-here the purpose and use

of the parking facility-- must be analyzed to discern if it passes

constitutional muster. See, e.g., City & County of San Francisco v.

Ross , 44 Cal.2d 52, 279 P.2d 529, 533 (1955) (rejecting the argument that

the provision of off-street parking facilities at a reasonable rate regardless

of ownership and primary purpose of operation ipso facto serves a public

purpose); Shizas v. City of Detroit , 333 Mich. 44, 52 N.W.2d 589 (1952)

(holding statute providing for condemnation of property to be used in part for

off-street parking facilities and in part for rental for private business void

for failure to satisfy the public purpose test); Reel v. City of

Freeport , 61 Ill. App.2d 448, 209 N.E.2d 675 (1965) (reversing dismissal on

the basis of allegations that defendant city conspired with other defendants to

sell to defendant department store an existing parking lot for private use and

thereafter take plaintiff's property to replace such parking facility for

purported public use); City of Austin v. Whittington , 55 Tex. Sup. Ct. J.

1245, 384 S.W.3d 766 (2012) (concluding that parking garage was a "public

building" where it was open to the public and the primary purpose of the garage

was to support an expanded convention center legislatively considered a public

use supportive of the city's condemnation of privately owned land necessary for

such use); Rhode Island Economic Development Corp. v. The Parking Co.,

L.P. , 892 A.2d 87 (holding where condemnation of a temporary easement in an

airport parking garage was primarily designed for economic benefit to gain

control of the garage at a discounted price, the taking was not for public use

and therefore was an unconstitutional taking).

8

Muskogee attempts to distinguish Lowery on the basis that economic

development ( i.e. , increased taxes, jobs and public and private

investment in the community) was not its stated purpose behind its instant

condemnation quest. While we refrain from making a determination on whether the

de facto purpose behind the taking herein was for economic development

purposes, we nevertheless find the principle holding in Lowery (that the

taking of private property to confer a private benefit on a private party is

unconstitutional) applicable to the taking herein regardless of the parties'

characterizations of its purpose.

9 In

Lowery , the private electric company had a contract with the water

district wherein the electric company had agreed to construct a water pipeline

beneficial to the public on the condition precedent of the company's success in

acquiring the rights-of-way for two private pipelines intended solely to serve

the private company. Lowery , 2006 OK 31, n. 14. "If we were to

find the public purpose test satisfied on these facts, we would essentially be

first permitting the taking of private property for a private use in order to

give rise to a private, non-party's contractual obligation to construct a

pipeline that would ultimately satisfy the public purposes requirement."

Id. Just as in Lowery , our determination of "public purpose" here

is constrained by the terms of a contract, which may never give rise to public

use/purpose unless and until the contractual obligatory first offering of

parking spaces to private third-party beneficiaries.

Citationizer © Summary of Documents Citing This Document

Cite

Name

Level

None Found.

Citationizer: Table of Authority

Cite

Name

Level

Oklahoma Court of Civil Appeals Cases

Cite Name Level

2011 OK CIV APP 1, 256 P.3d 1008, OKLAHOMA GAS AND ELECTRIC COMPANY v. BEECHER Discussed

Oklahoma Supreme Court Cases

Cite Name Level

1970 OK 118, 470 P.2d 572, APPLICATION OF SOUTHERN OKLAHOMA DEVELOP. TRUST Discussed at Length

1995 OK 117, 907 P.2d 1034, 66 OBJ 3471, McMillian v. Holcomb Discussed

2006 OK 31, 136 P.3d 639, BOARD OF COUNTY COMMISSIONERS OF MUSKOGEE COUNTY v. LOWERY Discussed at Length

1978 OK 66, 578 P.2d 1204, LUCCOCK v. CITY OF NORMAN Discussed

Title 11. Cities and Towns

Cite Name Level

11 O.S. 22-104, Right to Engage in Business - Public Utilities and Improvements - Eminent Domain - Issuance of Bonds - Lease of Public Utility Cited

Title 12. Civil Procedure

Cite Name Level

12 O.S. 952, Jurisdiction of Supreme Court Cited